Update and bump to the top.
Just to show how ahead of the news cycle I am,
Gasoline futures settled in New York at the highest price in nearly two months, surging over 20 cents in July alone.
August RBOB (New York Mercantile Exchange: RBCV1) gasoline futures gained nearly 1.5 percent and closed above $2.85 a gallon on Monday, mirroring the climb in oil prices as the U.S. dollar weakened and tensions rose in the Middle East.
Watching the TV news this morning one of the lead stories was that gasoline prices were falling. Quoting the Lundberg Survey we were told,
The average price for regular gasoline at U.S. filling stations fell 6.77 cents in the past three weeks to $3.4103 a gallon, according to Lundberg Survey Inc.
The survey covers the three weeks ended July 13 and is based on information received from about 2,500 stations by the Camarillo, California-based company. The average is down 20.47 cents from a year earlier. Gasoline is 55.67 cents below the year-to-date high of $3.9671 reached April 6.
I’m not sure where they are getting their numbers, but in my corner of the world prices have risen since just before July 4. On July 2, I paid a low of $3.25 a gallon at a discount gas station not far from my home. Last week, at the same gas station, I paid $3.39. Today, I drove by and saw the price marked as $3.43.
Gas prices are based on crude oil prices and gas companies follow those closely because they know that six months or so from now when the crude reaches their tanks as refined gas they are going to be paying what the price was back when the oil was sold. Which is why when crude oil prices jump, so do gas prices.
Another factor is demand world wide, which interestingly is down because of the slowing global economy. Which you would think would make crude oil and gas prices drop, but hasn’t. Why is that?
Because the dollar and the Euro continue to weaken and less buying power per dollar means prices on everything will rise.
I’d expect gas prices to continue to rise during the summer, but the truth is that it’s hard, if not impossible to predict this sort of thing. There are too many factors affecting crude prices, including the volatility of the Middle East. If there is an open conflict with Iran, the prices will probably go through the roof. Not because we buy oil from them, but because a lot of other places do and if they can’t ship crude oil to those countries, said countries will shop on the global market which will drive up prices.
Which makes the President’s decision to block the Keystone Pipeline look worse and worse every day.